Project Applicants Can Now Pay for Expedited Federal Environmental Review Under NEPA

The budget reconciliation bill signed into law on July 4 (also known as the “One Big Beautiful Bill”) adds a new provision to the National Environmental Policy Act (NEPA) that allows project sponsors/applicants to pay for expedited completion of an environmental review document. This is the latest in a recent spate of congressional and executive branch actions intended to speed up the environmental review process under NEPA, which requires federal agencies to analyze environmental impacts of projects that they carry out (including private projects that require federal agency approval or receive federal funding).

Under existing law (NEPA Section 107(g)(1), which was enacted in 2023), a lead agency must complete an environmental assessment (EA) within one year and an environmental impact statement (EIS) within two years. These deadlines begin to run from the earliest of the dates that the lead agency, as applicable, (1) determines that NEPA requires the preparation of an EA or EIS, (2) notifies the project applicant that its application to establish a right-of-way for the project is complete, or (3) issues a notice of intent (NOI) to prepare an EA or EIS. Section 107(g)(2) provides that if the lead agency is not able to meet this deadline, it may extend the deadline, in consultation with the project applicant, to provide only so much additional time as is necessary to complete the EA or EIS. Under Section 107(g)(3), if the lead agency does not meet required deadlines, a project applicant can seek a court order compelling the lead agency to act.

The budget reconciliation bill adds a new Section 112 to NEPA, which allows project sponsors to pay an optional fee to cut in half the deadlines for completing an EA or EIS. An earlier version of the bill had also exempted these expedited EAs or EISs from any judicial review, but that aspect was removed from the bill after the Senate Parliamentarian ruled that it was ineligible under the Senate’s budget reconciliation rules. Here is how the new provision in Section 112 works:

• A project sponsor considering paying for expedited environmental review must submit to the Council on Environmental Quality (CEQ) (1) a description of the project and (2) a declaration of whether the project sponsor intends to prepare the EA or EIS itself.
• Within 15 days of receipt of this information, CEQ must notify the project sponsor of the fee that would need to be paid for expedited environmental review. This fee is to be equal to (1) 125% of the lead agency’s anticipated costs to prepare the EA or EIS; or (2) if the applicant will prepare the EA or EIS in whole or in part, 125% of the lead agency’s anticipated costs to supervise preparation of the EA or EIS and, as applicable, prepare the EA or EIS.
• If the project sponsor chooses to pay the fee, the lead agency must complete an EA within 180 days after the date the fee is paid, and an EIS within one year after the date of publication of the NOI.

Notably, Section 112 puts the start of the environmental review timeline for an EA in the project sponsor’s control (i.e., when it pays the required fee). This is different from the timelines for completing non-expedited EAs as well as both expedited and non-expedited EISs: In those circumstances, the timeline starts upon action by the lead agency; conceivably, a lead agency could delay the start of the environmental review timeline by, for example, requesting additional studies and project information from the applicant before deeming a right-of-way application complete or issuing a NOI.

While this new provision appears to be straightforward — pay a fee in exchange for expedited completion of an EA or EIS — a number of questions remain about how it will be implemented by federal agencies, including:

• If a project sponsor pays for expedited environmental review under Section 112, can a lead agency reject the project sponsor’s request to prepare an EA or EIS? NEPA Section 107(f) (enacted in 2023) provides that federal agencies must prescribe procedures to allow a project sponsor to prepare an EA or EIS under the lead agency’s supervision. In such circumstances, the lead agency still must independently evaluate and take responsibility for the contents of the EA or EIS. Some agencies — for example, the Department of the Interior — have interpreted Section 107(f) as giving the lead agency discretion to allow a project sponsor to prepare an EA or EIS (see 43 C.F.R. § 46.107(a) (effective July 3, 2025)). The new Section 112 states that a project sponsor intending to pay a fee to expedite the NEPA process must submit to CEQ “a declaration of whether the sponsor intends to prepare the [EA] or [EIS] under section 107(f).” This statutory language could be interpreted as requiring the lead agency to allow an applicant to prepare an EA or EIS if the applicant so chooses. It remains to be seen how agencies interpret the interplay between Section 112 and their agency-specific procedures governing applicant-prepared NEPA documents.
• If an applicant pays for expedited environmental review under Section 112, will Section 107(g)(2) (governing extensions of deadlines) and Section 107(g)(3) (allowing a project sponsor to obtain a court order compelling the agency to act if the agency does not meet an applicable deadline) still apply? Those provisions, respectively, apply to “the deadline described in paragraph (1) [of Section 107(g)]” and “an applicable deadline under this section [i.e., Section 107].” The expedited deadlines in Section 112 apply “notwithstanding Section 107(g)(1).” Under a strict textual reading of the statute, the deadline extension and court order provisions of Sections 107(g)(2) and 107(g)(3), respectively, may not apply if a project applicant pays for expedited completion of a NEPA document, although excluding those provisions for expedited review situations may not have been Congress’s intent. It remains to be seen how agencies and courts interpret the interplay between Sections 107(g) and 112.
• How will CEQ determine, in advance, the estimated costs for preparing or supervising an EA or EIS for a project? While CEQ is responsible for administering the fee provision, the actual work of preparing or supervising NEPA documents is undertaken by other federal agencies. It remains to be seen whether CEQ will determine fee amounts itself or, instead, will look to a project’s lead agency to determine the fee. And in either case, it remains to be seen how CEQ and/or lead agencies will determine fees. For example, CEQ and/or lead agencies might estimate fees on a project-by-project basis; establish standard fees for all EAs and EISs; or develop fee schedules based on factors such as the type, size, location, and complexity of a project.
• What if CEQ takes more than 15 days to notify the project sponsor of the required fee? Although the statute requires that CEQ “shall” provide notice to the project sponsor of the amount of the fee no later than 15 days, it is possible that CEQ may need more time to determine the amount of the fee, especially in the early months of implementing this new provision. The statute does not expressly provide a remedy to project sponsors if CEQ does not meet this 15-day deadline.
• What if the lead agency’s actual costs are more or less than the fee paid by the project sponsor? Section 112 requires payment in advance of a fee that is 125% of the lead agency’s estimated costs to prepare or supervise the EA or EIS. This is not a traditional cost recovery or reimbursement arrangement. It is possible that the lead agency’s actual costs will exceed the amount of the fee; the statute does not address this scenario. It remains to be seen whether lead agencies may attempt to recover costs from project sponsors if their actual costs to prepare or supervise the EA or EIS exceed the amount of the fee paid in advance. On the flip side, the statute also does not address whether project sponsors can request a refund of a portion of the fee if the lead agency’s actual costs are less than the amount of the fee paid.
• Will Section 112 apply to surface transportation projects subject to the special NEPA procedures under 23 U.S.C. § 139? Special NEPA procedures apply to surface transportation projects that qualify as “major projects” under 23 U.S.C. § 139. In guidance issued in December 2024, the Federal Highway Administration, Federal Transit Administration, and Federal Railroad Administration stated that the timeframes in 23 U.S.C. § 139(g)(1)(B)(iii) apply in lieu of the deadlines in NEPA Section 107(g)(1). It remains to be seen whether the federal surface transportation agencies will similarly interpret 23 U.S.C. § 139(g)(1)(B)(iii) as applying in lieu of the deadlines in NEPA Section 112. If so, sponsors of “major projects” may not be able to take advantage of NEPA Section 112 to pay for expedited environmental review under NEPA.
• Will projects that pay a fee for expedited environmental review also see expedited decision-making? Sections 107(g)(1) and 112 only set deadlines for completing an EA or EIS. There is no deadline for a lead agency to issue a finding of no significant impact, record of decision, or other decision document after completing the EA or EIS, nor is there a deadline for cooperating agencies to issue permits or make other decisions. While NEPA compliance is a significant component of federal agencies’ decision-making process, it is just one piece of the permitting puzzle — other environmental laws often affect the timing and substance of agencies’ decisions. Cutting in half the time for completion of an EA or EIS could help speed up federal agency permitting and decision-making, but may not cut in half the overall timeline to final agency decisions.

Allen Matkins will continue to monitor developments in this space, including any implementation guidance that CEQ or other agencies may issue.